PR Newswire | Oct 30, 2020 09:44AM EDT

10/30 08:43 CDT

BBVA USA reports third quarter 2020 results- Revenue: Total revenue of $927 million, up 21 percent (annualized) from second quarter 2020 levels as both net interest income (+19 percent annualized) and noninterest income (+23 percent annualized) posts double digit gains- Expenses: Noninterest expense totals $596 million, up on a linked quarter basis and down 1 percent from the year ago quarter. Efficiency ratio ends the quarter at 63.55 percent compared to 64.95 percent on a linked quarter basis and 62.76 percent in the year ago quarter- Operating income: Operating income(1) in the quarter totals $331 million, up 34 percent (annualized) from the second quarter of 2020 and down 9 percent from third quarter 2019 levels- Loans and Deposits: Newly funded loans in the quarter of $3.5 billion brings the total for the first nine months of 2020 to $15.8 billion, a 41 percent increase compared to the same time period a year ago. Total deposits end the quarter at $86.4 billion, up 4 percent (annualized) from the second quarter of 2020 and up 17 percent from the year ago quarter- Provision for credit losses: Provision for credit losses of $151 million in the quarter, down significantly from that recorded in the previous two quarters and comparable to the $141 million recorded in the third quarter last year. Provision for loan losses exceeds net charge-offs by $50 million in the quarter- Credit quality: Net charge-offs as a percentage of average loans at 59 basis points compared to 72 basis points for the second quarter of 2020. Nonperforming loan ratio at 2.00 percent and coverage ratio at 136 percent- Capital and Liquidity: CET1(2) ratio ends the quarter at 12.79, up 61 basis points from second quarter 2020 levels. Liquidity Coverage Ratio (LCR) at 144 percent, unchanged on a sequential quarter basis and from the quarter a year ago HOUSTON, Oct. 30, 2020

HOUSTON, Oct. 30, 2020 /PRNewswire/ -- BBVA USA Bancshares, Inc., a Sunbelt-based bank holding company (BBVA USA), reported today net income of $166 million for the third quarter of 2020 compared to a net loss of $124 million in the second quarter of 2020 and net income of $183 million in the third quarter of 2019. Return on average assets and return on average tangible equity1 for the third quarter of 2020 were 0.63 percent and 7.32 percent, respectively.

For the first nine months of 2020, the company reported a net loss of $2.2 billion. Included in the first quarter of 2020 was a non-cash, goodwill impairment charge of $2.2 billion that reflected the drastic change in macroeconomic conditions and forecasts brought about by the COVID-19 pandemic and subsequent decline in interest rates and oil prices. Excluding the impact of this non-cash charge, the adjusted net loss1 for the first nine months of 2020 was $10 million, further reflecting the decline in interest rates and higher provision expense necessary to reflect the economic and business disruption caused by the pandemic.

"During the third quarter we delivered solid results while continuing to successfully navigate the challenges to our customers, communities and our employees brought about by the Covid-19 pandemic," said Javier Rodrguez Soler, president and CEO of BBVA USA.

Total revenue for the third quarter was $927 million, up 21 percent (annualized) from second quarter 2020 levels and down 2 percent from third quarter 2019 levels. Net interest income in the quarter totaled $642 million compared to $612 million in the second quarter of 2020 and $641 million in the third quarter of 2019. The percent net interest margin for the third quarter of 2020 was 2.68 percent compared to 2.66 percent in the second quarter of 2020 and 3.07 percent in the third quarter of 2019. The decline in the percent net interest margin from a year ago reflects a lower interest rate environment, the subsequent repricing of variable rate loans, offset in part, by efforts to reduce deposit costs.

Noninterest income (excluding securities gains) for the quarter totaled $285 million compared to $269 million in the second quarter of 2020 and $300 million for the third quarter of 2019. While down from a year ago, the increase in noninterest income on a linked quarter basis was driven by service charges on deposit accounts (+$10 million) and card and merchant processing fees (+$5 million) reflecting higher levels of business activity, albeit still below pre-pandemic levels. Other noninterest income increased on a linked quarter basis, primarily as a result of a valuation adjustment to investments held by our small business investment company that negatively impacted second quarter 2020 levels. While investment banking and advisory fees and mortgage banking declined from second quarter levels, both business lines reflected double digit increases compared to the year ago quarter.

During the third quarter no gains or losses were recorded on investment securities while $3 million of investment securities gains were recorded in the second quarter of 2020 and $21 million was recorded in the third quarter of 2019.

Total noninterest expense was $596 million compared to $579 million in the second quarter of 2020 and $599 million in the third quarter of 2019. While salaries, benefits and commissions increased on a linked quarter basis, compared to the year ago quarter the increase was only 1 percent. Equipment expense also increased on a linked quarter basis and was up 8 percent compared to a year ago. Professional services were flat compared to the second quarter of 2020 while up 7 percent compared to the third quarter of 2019. Operating income1 in the quarter totaled $331 million, up 34 percent (annualized) from the second quarter of 2020 and down 9 percent from the third quarter 2019 levels.

Total loans at the end of the third quarter of 2020 were $66.4 billion, down 12 percent (annualized) from $68.5 billion at the end of the second quarter of 2020 and up 5 percent from the $63.5 billion at the end of the third quarter of 2019. Commercial loans associated with the energy sector dropped to $2.5 billion at the end of the third quarter of 2020 compared to $3.0 billion at the end of the second quarter of 2020. During the quarter, newly funded loans totaled $3.5 billion bringing the total for the first nine months of 2020 to $15.8 billion, a 41 percent increase compared to the same time period a year ago.

Deposit growth continued in the quarter with total deposits ending the quarter at $86.4 billion, up 4 percent (annualized) from the second quarter of 2020 and up $12.8 billion or 17 percent compared to the third quarter of 2019. Low-cost deposits were a key driver of deposit growth as noninterest bearing deposits ended the quarter at $26.8 billion, up 13 percent (annualized) on a linked quarter basis and up $5.8 billion or 28 percent compared to the third quarter of 2019.

As a result of deposit growth outpacing loan growth, the loan to deposit ratio ended the third quarter of 2020 at 76.9 percent compared to 80.2 percent at the end of the second quarter of 2020 and 86.3 percent at the end of the third quarter of 2019. BBVA USA continues to maintain a strong liquidity position with the LCR at 144 percent, unchanged from the levels recorded in both the second quarter of 2020 and the third quarter of 2019.

After two quarters of increased provision expense recorded to primarily address the impact of the COVID-19 pandemic and corresponding impact on economic conditions, provision for credit losses totaled $151 million in the quarter and exceeded net charge-offs by $50 million. Net charge-offs as a percentage of average total loans were 59 basis points in the quarter compared to 72 basis points in the second quarter of 2020 and 110 basis points in the third quarter of 2019. The allowance for loan losses as a percentage of total loans at the end of the quarter rose to 2.73 percent compared to 2.57 percent at the end of the second quarter of 2020 and 1.49 percent in the year ago quarter.

Nonperforming loans as a percentage of total loans ended the third quarter of 2020 at 2.00 percent, up from the 1.21 percent at the end of the second quarter of 2020 and 1.14 percent at the end of the third quarter of 2019. The increase in nonperforming loans on a linked quarter basis was primarily attributed to an increase in nonaccrual loans associated with the commercial loan portfolio (+$271 million), as well as increases in the commercial real estate - mortgage (+$158 million) and residential real estate - mortgage (+$35 million) portfolios. The coverage ratio of nonperforming loans ended the quarter at 136 percent compared to 211 percent at the end of the second quarter of 2020 and 131 percent at the end of the third quarter of 2019.

Total shareholder's equity at the end of the third quarter of 2020 totaled $11.4 billion compared to $11.3 billion at the end of the second quarter of 2020 and $14.1 billion at the end of the third quarter of 2019. Total tangible shareholder's equity1 totaled $9.0 billion at the end of the third quarter of 2020 compared to $8.9 billion at the end of the second quarter of 2020 and $9.1 billion at the end of the third quarter of 2019. The CET12 ratio ended the quarter at 12.79 percent compared to 12.18 percent at the end of the second quarter of 2020 and 12.89 percent at the end of the third quarter of 2019. All of BBVA USA's regulatory capital ratios2 continue to exceed the requirements under "well-capitalized" guidelines.

During the quarter, Global Finance recognized BBVA USA as one of the World's Best Corporate/Institutional Digital Banks in North America for 2020, naming us a winner in the subcategories of Best Mobile Adaptive Site and Best Mobile Banking App.

^1 Operating income and adjusted net loss are Non-GAAP financial measures webelieve aid in understanding certain areas of our performance. The calculationof these measures is included on the page titled Non-GAAP Reconciliation.

^2 Regulatory capital ratios at September 30, 2020, are estimated.

For more BBVA news visit, www.bbva.com and the U.S. Newsroom.Additional news updates can be found via Twitter and Instagram.For more financial information about BBVA in the U.S., visit bbvausa.investorroom.com.

About BBVA

BBVA GroupBBVA (NYSE: BBVA) is a customer-centric global financial services group founded in 1857. The Group has a strong leadership position in the Spanish market and is the largest financial institution in Mexico. It has leading franchises in South America and the Sunbelt Region of the United States. It is also the leading shareholder in Turkey's BBVA Garanti. BBVA's purpose is to bring the age of opportunities to everyone, based on our customers' real needs: provide the best solutions, helping them make the best financial decisions, through an easy and convenient experience. The institution rests in solid values: Customer comes first, we think big and we are one team. BBVA's responsible banking model aspires to achieve a more inclusive and sustainable society.

On February 28, 2020, BBVA filed its annual report on Form 20-F for the year ended December 31, 2019, with the U.S. Securities and Exchange Commission. A copy can be accessed on the BBVA website at https://shareholdersandinvestors.bbva.com/the-share/adrs-english/. Holders of BBVA's American Depositary Receipts (ADRs) may request a hard copy of the Form 20-F for the year ended December 31, 2019, including complete audited financial statements, free of charge. To request a copy, contact Ed Bilek at ed.bilek@bbva.com.

BBVA USAIn the U.S., BBVA is a Sunbelt-based financial institution that operates 637 branches, including 328 in Texas, 88 in Alabama, 63 in Arizona, 61 in California, 43 in Florida, 37 in Colorado and 17 in New Mexico. The bank ranks among the top 25 largest U.S. commercial banks based on deposit market share and ranks among the largest banks in Alabama (2nd), Texas (4th) and Arizona (6th). In the U.S., BBVA has been recognized as one of the leading small business lenders by the Small Business Administration (SBA) and ranked 14th nationally in terms of dollar volume of SBA loans originated in fiscal year 2019.

Forward-Looking StatementsCertain statements in this press release may contain forward-looking statements about BBVA USA Bancshares, Inc. (the "Company") and its industry that involve substantial risks and uncertainties. The use of "we," "our" and similar terms refer to the Company. Statements other than statements of current or historical fact, including statements regarding our future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions are intended to identify these forward-looking statements. These forward-looking statements reflect the Company's views regarding future events and financial performance. Such statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond the Company's control, that could cause actual results to differ materially from anticipated results. If the Company's assumptions and estimates are incorrect, or if the Company becomes subject to significant limitations as the result of litigation or regulatory action, then the Company's actual results could vary materially from those expressed or implied in these forward-looking statements. The forward-looking statements are and will be based on the Company's then current views and assumptions regarding future events and speak only as of their dates made. The Company assumes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by securities law or regulation. For further information regarding risks and uncertainties associated with the Company's business, please refer to the "Risk Factors" section of the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") on February 28, 2020, as updated by our subsequent SEC filings.

BBVA USA BANCSHARES, INC.

(Unaudited)

(Dollars in thousands)

Three Months Ended % Nine Months Ended % September 30, September 30,

2020 2019 Change 2020 2019 Change

EARNINGS SUMMARY

Net interest income $ 641,850 $ 641,041 - $ 1,843,322 $ 1,983,879 (7)

Noninterest income [a] 284,660 300,316 (5) 868,640 833,399 4

Total revenue [a] 926,510 941,357 (2) 2,711,962 2,817,278 (4)

Investment securities gain, net - 21,003 NM 22,616 29,961 (25)

Provision for credit losses 150,977 140,629 7 1,047,427 477,939 119

Goodwill impairment - - - 2,185,000 - NM

Noninterest expense 595,628 598,887 (1) 1,799,138 1,779,174 1

Pretax (loss) income 179,905 222,844 (19) (2,296,987) 590,126 (489)

Income tax (benefit) expense 13,664 39,899 (66) (101,506) 106,014 (196)

Net (loss) income $ 166,241 $ 182,945 (9) $ (2,195,481) $ 484,112 (554)

Adjusted net (loss) income [b] $ 166,241 $ 182,945 (9) $ (10,481) $ 484,112 (102)

SELECTED RATIOS

Return on average assets 0.63 % 0.76 % (2.90)% 0.69 %

Return on average assets- adjusted [b] 0.63 0.76 (0.01) 0.69

Return on average tangible equity [b] 7.32 8.03 (32.36) 7.36

Return on average tangible equity- adjusted [b] 7.32 8.03 (0.15) 7.36

Efficiency ratio [b] 63.55 62.76 65.52 62.28

Average common equity to average assets 10.68 14.53 11.76 14.47

Average loans to average total deposits 79.53 87.17 82.85 88.64

Common equity tier I capital (CET1) [c] 12.79 12.89 12.79 12.89

Tier I capital ratio [c] 13.13 13.24 13.13 13.24

Total capital ratio [c] 15.30 15.39 15.30 15.39

Leverage ratio [c] 8.82 10.03 8.82 10.03

Average for Three Months Average for Nine Months Ending Balance

Ended September 30, % Ended September 30, % September 30, %

2020 2019 Change 2020 2019 Change 2020 2019 Change

BALANCE SHEET HIGHLIGHTS

Total loans $ 67,837,185 $ 63,629,992 7 $ 67,324,774 $ 64,382,982 5 $ 66,434,066 $ 63,454,885 5

Total debt securities 14,422,320 13,715,979 5 14,142,922 13,703,073 3 15,472,108 13,947,224 11

Earning assets 96,896,614 84,528,727 15 92,565,282 83,402,162 11 96,738,163 83,447,829 16

Total assets 104,282,898 94,942,456 10 101,058,770 93,800,891 8 103,652,922 92,914,087 12

Noninterest bearing demand deposits 26,034,478 20,754,143 25 23,527,092 20,409,910 15 26,803,670 21,019,303 28

Interest bearing transaction accounts 52,181,312 37,711,142 38 48,597,866 36,861,148 32 53,346,388 38,614,048 38

Total transaction accounts 78,215,790 58,465,285 34 72,124,958 57,271,058 26 80,150,058 59,633,351 34

Total deposits 85,301,231 72,994,321 17 81,258,400 72,631,301 12 86,371,032 73,569,442 17

Total shareholder's equity 11,394,928 14,056,939 (19) 12,140,120 13,828,060 (12) 11,394,964 14,101,618 (19)

Total shareholder's equity - tangible [b] 9,036,984 9,033,459 - 9,062,151 8,798,038 3 9,037,925 9,081,045 -

[a] Excludes net gain on sales of investment securities.

[b] Non-GAAP financial measure that we believe aids in understanding certainareas of our performance. The calculation of this measure is included on thepage titled Non-GAAP Reconciliation.

[c] Current period regulatory capital ratios are estimated.

NM = Not meaningful

BBVA USA BANCSHARES, INC.

(Unaudited)

(Dollars in Thousands)

2020 2019

September 30 June 30 March 31 December 31 September 30

NONPERFORMING ASSETS

Nonaccrual loans [a] $ 1,233,040 $ 764,744 $ 676,716 $ 606,843 $ 653,242

Loans 90 days or more past due [b] 94,072 66,163 61,774 71,126 67,869

TDRs 90 days or more past due 830 423 335 414 588

Total nonperforming loans [a] 1,327,942 831,330 738,825 678,383 721,699

Foreclosed real estate 15,051 14,871 20,642 20,833 17,381

Other repossessed assets 8,527 8,599 13,338 10,930 17,584

Total nonperforming assets $ 1,351,520 $ 854,800 $ 772,805 $ 710,146 $ 756,664

TDRs accruing and past due less than 90 days $ 114,583 $ 95,788 $ 97,404 $ 97,901 $ 97,218

Total nonperforming loans as a % of loans 2.00 % 1.21 % 1.09 % 1.06 % 1.14 %

Total nonperforming assets as a % of total loans, foreclosed 2.03 1.25 1.14 1.11 1.19real estate, and other repossessed assets

Three Months Ended

2020 2019

September 30 June 30 March 31 December 31 September 30

ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period $ 1,754,352 $ 1,351,072 $ 920,993 $ 942,191 $ 977,660

Adoption of ASC 326 - - 184,931 - -

Net charge-offs (NCO) 100,818 123,054 111,798 140,703 176,098

Provision for loan losses 150,889 526,334 356,946 119,505 140,629

Balance at end of period $ 1,804,423 $ 1,754,352 $ 1,351,072 $ 920,993 $ 942,191

Allowance for loan losses as a % of total loans 2.73 % 2.57 % 2.00 % 1.44 % 1.49 %

Allowance for loan losses as a % of nonperforming loans [c] 135.88 211.03 182.87 135.76 130.55

Allowance for loan losses as a % of nonperforming assets [c] 133.51 205.24 174.83 129.69 124.52

Annualized as a % of average loans:

NCO - QTD 0.59 0.72 0.69 0.87 1.10

NCO - YTD 0.67 0.71 0.69 0.88 0.88

[a] Includes loans held for sale.

[b] Excludes loans classified as troubled debt restructuring (TDRs).

[c] Includes loans held for sale that are on nonaccrual status.

BBVA USA BANCSHARES, INC.

(Unaudited)

(Dollars in Thousands)

Three Months Ended September 30,

2020 2019

Average Balance Income/ Expense Yield/ Rate Average Balance Income/ Expense Yield/ Rate

YIELD/RATE ANALYSIS

(Taxable Equivalent Basis)

Assets

Earning assets:

Loans $ 67,837,185 $ 654,687 3.84 % $ 63,629,992 $ 782,948 4.88 %

Debt securities available for sale [a] 5,325,937 19,474 1.45 7,987,642 36,051 1.79

Debt securities held to maturity 8,967,670 50,747 2.25 5,737,726 40,075 2.77

Other earning assets [b] 14,637,109 7,328 0.20 7,182,756 47,015 2.60

Total earning assets [a] 96,767,901 732,236 3.01 84,538,116 906,089 4.25

Allowance for credit losses (1,768,829) (971,396)

Unrealized gain (loss) on debt securities available for sale 128,713 (9,389)

Other assets 9,155,113 11,385,125

Total assets $ 104,282,898 $ 94,942,456

Liabilities and Shareholder's Equity

Interest bearing liabilities:

Interest bearing demand deposits $ 14,188,763 $ 9,777 0.27 $ 8,870,753 $ 25,179 1.13

Savings and money market accounts 37,992,549 26,476 0.28 28,840,389 96,060 1.32

Certificates and other time deposits 7,085,441 24,894 1.40 14,529,036 82,740 2.26

Total interest bearing deposits 59,266,753 61,147 0.41 52,240,178 203,979 1.55

FHLB and other borrowings 3,567,285 14,644 1.63 3,860,727 32,975 3.39

Federal funds purchased and securities sold under agreement to 1,492,378 3,736 1.00 1,401,320 15,137 4.29repurchase [b]

Other short-term borrowings 5,984 49 3.26 13,348 72 2.14

Total interest bearing liabilities 64,332,400 79,576 0.49 57,515,573 252,163 1.74

Noninterest bearing deposits 26,034,478 20,754,143

Other noninterest bearing liabilities 2,521,092 2,615,801

Total liabilities 92,887,970 80,885,517

Shareholder's equity 11,394,928 14,056,939

Total liabilities and shareholder's equity $ 104,282,898 $ 94,942,456

Net interest income/ net interest spread 652,660 2.52 % 653,926 2.51 %

Net yield on earning assets 2.68 % 3.07 %

Total taxable equivalent adjustment 10,810 12,885

Net interest income $ 641,850 $ 641,041

[a] Excludes adjustment for market valuation.

[b] Yield/rate reflects impact of balance sheet offsetting.

BBVA USA BANCSHARES, INC.

(Unaudited)

(Dollars in Thousands)

Nine Months Ended September 30,

2020 2019

Average Balance Income/ Expense Yield/ Rate Average Balance Income/ Expense Yield/ Rate

YIELD/RATE ANALYSIS

(Taxable Equivalent Basis)

Assets

Earning assets:

Loans $ 67,324,774 $ 2,061,376 4.09 % $ 64,382,982 $ 2,395,043 4.97 %

Debt securities available for sale [a] 5,923,281 36,787 0.83 8,957,354 134,698 2.01

Debt securities held to maturity 8,125,463 133,462 2.19 4,845,107 105,298 2.91

Other earning assets [b] 11,097,586 65,798 0.79 5,316,107 106,946 2.69

Total earning assets [a] 92,471,104 2,297,423 3.32 83,501,550 2,741,985 4.39

Allowance for credit losses (1,404,498) (952,170)

Unrealized gain (loss) on debt securities available for sale 94,178 (99,388)

Other assets 9,897,986 11,350,899

Total assets $ 101,058,770 $ 93,800,891

Liabilities and Shareholder's Equity

Interest bearing liabilities:

Interest bearing demand deposits $ 13,350,036 47,758 0.48 $ 8,954,456 72,061 1.08

Savings and money market accounts 35,247,830 155,211 0.59 27,906,692 261,172 1.25

Certificates and other time deposits 9,133,442 120,199 1.76 15,360,243 255,578 2.22

Total interest bearing deposits 57,731,308 323,168 0.75 52,221,391 588,811 1.51

FHLB and other borrowings 3,623,293 57,756 2.13 4,057,769 104,901 3.46

Federal funds purchased and securities sold under agreement to 1,379,052 38,668 3.75 763,681 24,886 4.36repurchase [b]

Other short-term borrowings 12,844 440 4.58 16,235 368 3.03

Total interest bearing liabilities 62,746,497 420,032 0.89 57,059,076 718,966 1.68

Noninterest bearing deposits 23,527,092 20,409,910

Other noninterest bearing liabilities 2,645,061 2,503,845

Total liabilities 88,918,650 79,972,831

Shareholder's equity 12,140,120 13,828,060

Total liabilities and shareholder's equity $ 101,058,770 $ 93,800,891

Net interest income/ net interest spread 1,877,391 2.43 % 2,023,019 2.71 %

Net yield on earning assets 2.71 % 3.24 %

Total taxable equivalent adjustment 34,069 39,140

Net interest income $ 1,843,322 $ 1,983,879

[a] Excludes adjustment for market valuation.

[b] Yield/rate reflects impact of balance sheet offsetting.

BBVA USA BANCSHARES, INC.

(Unaudited)

(Dollars in Thousands)

Nine Months Three Months Ended

Ended September 30, % 2020 2019

2020 2019 Change September 30 June 30 March 31 December 31 September 30

NONINTEREST INCOME

Service charges on deposit accounts $ 160,474 $ 185,782 (14) $ 54,710 $ 44,233 $ 61,531 $ 64,585 $ 65,143

Card and merchant processing fees 142,135 146,742 (3) 48,628 43,416 50,091 50,805 50,385

Investment services sales fees 85,596 87,316 (2) 26,218 24,971 34,407 28,130 29,287

Investment banking and advisory fees 111,805 67,939 65 40,013 45,061 26,731 15,720 28,324

Money transfer income 77,118 73,273 5 27,109 25,461 24,548 25,871 26,020

Corporate and correspondent investment sales 33,050 24,298 36 3,478 18,855 10,717 14,263 11,799

Asset management fees 35,488 34,039 4 12,024 11,560 11,904 11,532 11,405

Mortgage banking 55,060 19,011 190 13,741 23,868 17,451 9,048 8,204

Bank owned life insurance 14,691 12,895 14 4,972 5,094 4,625 4,584 3,508

Other 153,223 182,104 (16) 53,767 26,358 73,098 48,046 66,241

868,640 833,399 4 284,660 268,877 315,103 272,584 300,316

Investment securities gains, net 22,616 29,961 (25) - 3,477 19,139 - 21,003

Total noninterest income $ 891,256 $ 863,360 3 $ 284,660 $ 272,354 $ 334,242 $ 272,584 $ 321,319

NONINTEREST EXPENSE

Salaries, benefits and commissions $ 858,541 $ 884,111 (3) $ 296,708 $ 251,697 $ 310,136 $ 297,823 $ 295,092

Equipment 198,226 191,940 3 68,793 64,752 64,681 64,826 63,908

Professional services 226,338 210,583 7 78,018 78,100 70,220 82,343 72,903

Net occupancy 122,573 123,298 (1) 41,145 41,585 39,843 43,302 42,241

Money transfer expense 53,991 50,273 7 18,897 17,958 17,136 17,951 18,005

Marketing 29,960 42,276 (29) 9,283 8,778 11,899 12,888 15,471

Communications 16,721 16,603 1 5,542 5,808 5,371 5,179 5,469

Goodwill impairment 2,185,000 - NM - - 2,185,000 470,000 -

Other 292,788 260,090 13 77,242 110,772 104,774 92,594 85,798

Total noninterest expense $ 3,984,138 $ 1,779,174 124 $ 595,628 $ 579,450 $ 2,809,060 $ 1,086,906 $ 598,887

NM = Not meaningful

BBVA USA BANCSHARES, INC.

(Unaudited)

(Dollars in Thousands)

Nine Months Three Months Ended

Ended September 30, 2020 2019

2020 2019 September 30 June 30 March 31 December 31 September 30

NON-GAAP RECONCILIATION

Computation of Operating Income:

Net interest income (GAAP) $ 1,843,322 $ 1,983,879 $ 641,850 $ 612,017 $ 589,455 $ 623,154 $ 641,041

Plus: noninterest income (GAAP) 891,256 863,360 284,660 272,354 334,242 272,584 321,319

Less: noninterest expense (GAAP) 3,984,138 1,779,174 595,628 579,450 2,809,060 1,086,906 598,887

Plus: goodwill impairment (GAAP) 2,185,000 - - - 2,185,000 470,000 -

Operating income (non-GAAP) $ 935,440 $ 1,068,065 $ 330,882 $ 304,921 $ 299,637 $ 278,832 $ 363,473

Computation of Tangible Shareholder's Equity:

Total shareholder's equity $ 11,394,964 $ 14,101,618 $ 11,394,964 $ 11,270,789 $ 11,358,354 $ 13,386,589 $ 14,101,618

Less: goodwill and other intangibles (GAAP) 2,357,039 5,020,573 2,357,039 2,357,343 2,359,540 4,555,330 5,020,573

Tangible shareholder's equity (non-GAAP) $ 9,037,925 $ 9,081,045 $ 9,037,925 $ 8,913,446 $ 8,998,814 $ 8,831,259 $ 9,081,045

Computation of Average Tangible Equity:

Total stockholder's equity (average) (GAAP) $ 12,140,120 $ 13,828,060 $ 11,394,928 $ 11,533,007 $ 13,500,615 $ 14,090,315 $ 14,056,939

Less: goodwill and other intangibles (average) (GAAP) 3,077,969 5,030,022 2,357,944 2,357,132 4,526,744 5,016,935 5,023,480

Average tangible equity (non-GAAP) [B] $ 9,062,151 $ 8,798,038 $ 9,036,984 $ 9,175,875 $ 8,973,871 $ 9,073,380 $ 9,033,459

Net income (loss) (GAAP) [A] $ (2,195,481) $ 484,112 $ 166,241 $ (124,437) $ (2,237,285) $ (330,705) $ 182,945

Return on average tangible equity (non-GAAP) ([A]/[B], annualized) (32.36)% 7.36 % 7.32 % (5.45)% (100.27)% (14.46)% 8.03 %

Computation of Adjusted Net Income, Return on Average Assets and Return onAverage Tangible Equity:

Net income (loss) (GAAP) $ (2,195,481) $ 484,112 $ 166,241 $ (124,437) $ (2,237,285) $ (330,705) $ 182,945

Plus: goodwill impairment (GAAP) 2,185,000 - - - 2,185,000 470,000 -

Adjusted net income (non-GAAP) [C] $ (10,481) $ 484,112 $ 166,241 $ (124,437) $ (52,285) $ 139,295 $ 182,945

Average assets (GAAP) [D] $ 101,058,770 $ 93,800,891 $ 104,282,898 $ 104,204,062 $ 96,356,113 $ 95,754,954 $ 94,942,456

Return on average assets - adjusted (non-GAAP) ([C]/[D], annualized) (0.01)% 0.69 % 0.63 % (0.48)% (0.22)% 0.58 % 0.76 %

Return on average tangible equity - adjusted (non-GAAP) ([C]/[B], annualized) (0.15) 7.36 7.32 (5.45) (2.34) 6.09 8.03

Computation of Efficiency Ratio:

Noninterest expense (GAAP) $ 3,984,138 $ 1,779,174 $ 595,628 $ 579,450 $ 2,809,060 $ 1,086,906 $ 598,887

Less: securities and goodwill impairment (GAAP) 2,185,000 113 - - 2,185,000 470,102 -

Total expense (GAAP) [E] $ 1,799,138 $ 1,779,061 $ 595,628 $ 579,450 $ 624,060 $ 616,804 $ 598,887

Net interest income, taxable equivalent basis $ 1,877,391 $ 2,023,019 $ 652,660 $ 623,242 $ 601,489 $ 635,552 $ 653,926

Plus: noninterest income (GAAP) 891,256 863,360 284,660 272,354 334,242 272,584 321,319

Less: investment securities gains, net (GAAP) 22,616 29,961 - 3,477 19,139 - 21,003

Total revenue [F] $ 2,746,031 $ 2,856,418 $ 937,320 $ 892,119 $ 916,592 $ 908,136 $ 954,242

Efficiency ratio (non-GAAP) ([E]/[F]) 65.52 % 62.28 % 63.55 % 64.95 % 68.08 % 67.92 % 62.76 %

BBVA USA BANCSHARES, INC.

SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited)

(Dollars in Thousands)

At or Quarter Ended September 30, 2020

30-59 Days Past 60-89 Days Past 90 Days or More Past Due Nonaccrual Accruing Not Past Due, Nonaccrual, or Total Net Charge Offs Due Due TDRs TDR (Recoveries)

Commercial, financial and agricultural $ 22,632 $ 12,890 $ 21,261 $ 660,254 $ 19,713 $ 26,203,423 $ 26,940,173 $ 50,789

Real estate - construction 2,861 303 532 12,614 61 2,387,303 2,403,674 153

Commercial real estate - mortgage 19,280 3,968 1,816 275,668 1,831 13,393,237 13,695,800 98

Residential real estate - mortgage 88,035 49,344 39,728 204,442 55,132 13,027,076 13,463,757 (117)

Equity lines of credit 13,418 6,300 3,445 37,216 - 2,381,344 2,441,723 233

Equity loans 1,847 1,158 271 8,758 20,750 161,583 194,367 (195)

Credit card 9,776 7,526 16,542 - - 873,949 907,793 18,527

Consumer - direct 25,762 11,730 6,643 9,134 17,926 1,952,501 2,023,696 24,559

Consumer - indirect 34,116 9,744 3,834 24,954 - 4,036,981 4,109,629 6,771

Total loans $ 217,727 $ 102,963 $ 94,072 $ 1,233,040 $ 115,413 $ 64,417,397 $ 66,180,612 $ 100,818

Loans held for sale $ - $ - $ - $ - $ - $ 253,454 $ 253,454 $ -

At or Quarter Ended June 30, 2020

30-59 Days Past 60-89 Days Past 90 Days or More Past Due Nonaccrual Accruing Not Past Due or Impaired Total Net Charge Offs Due Due TDRs (Recoveries)

Commercial, financial and agricultural $ 51,207 $ 5,130 $ 8,450 $ 389,615 $ 1,866 $ 28,325,856 $ 28,782,124 $ 29,038

Real estate - construction 12,907 - 532 13,317 64 2,271,650 2,298,470 (36)

Commercial real estate - mortgage 8,592 2,190 415 117,213 1,876 13,670,383 13,800,669 8,670

Residential real estate - mortgage 70,252 22,495 13,140 169,387 54,289 13,099,576 13,429,139 182

Equity lines of credit 8,461 8,162 3,555 34,915 - 2,461,741 2,516,834 (476)

Equity loans 1,311 692 148 8,457 21,280 178,092 209,980 (120)

Credit card 6,668 7,286 22,134 - - 929,484 965,572 20,107

Consumer - direct 19,927 10,923 11,623 7,624 16,836 2,067,175 2,134,108 42,271

Consumer - indirect 32,519 11,162 6,166 24,216 - 4,030,541 4,104,604 23,418

Total loans $ 211,844 $ 68,040 $ 66,163 $ 764,744 $ 96,211 $ 67,034,498 $ 68,241,500 $ 123,054

Loans held for sale $ - $ - $ - $ - $ - $ 245,851 $ 245,851 $ -

BBVA USA BANCSHARES, INC.

SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited)

(Dollars in Thousands)

At or Quarter Ended March 31, 2020

30-59 Days Past 60-89 Days Past 90 Days or More Past Due Nonaccrual Accruing Not Past Due or Impaired Total Net Charge Offs Due Due TDRs (Recoveries)

Commercial, financial and agricultural $ 31,493 $ 7,588 $ 3,013 $ 323,881 $ 1,931 $ 27,464,207 $ 27,832,113 $ 19,014

Real estate - construction 9,356 66 574 13,676 69 2,147,973 2,171,714 (13)

Commercial real estate - mortgage 13,439 5,241 912 114,839 3,333 13,715,641 13,853,405 (73)

Residential real estate - mortgage 67,938 25,187 5,744 147,058 55,116 13,144,975 13,446,018 (172)

Equity lines of credit 16,382 6,244 3,295 33,354 - 2,552,075 2,611,350 536

Equity loans 2,636 1,147 293 8,027 22,392 194,874 229,369 212

Credit card 13,230 8,932 23,707 - - 977,503 1,023,372 19,517

Consumer - direct 34,553 19,738 15,196 7,160 14,898 2,184,500 2,276,045 51,726

Consumer - indirect 76,547 24,249 9,040 28,721 - 3,957,471 4,096,028 21,051

Total loans $ 265,574 $ 98,392 $ 61,774 $ 676,716 $ 97,739 $ 66,339,219 $ 67,539,414 $ 111,798

Loans held for sale $ - $ - $ - $ - $ - $ 117,752 $ 117,752 $ -

At or Quarter Ended December 31, 2019

30-59 Days Past 60-89 Days Past 90 Days or More Past Due Nonaccrual Accruing Not Past Due or Impaired Total Net Charge Offs Due Due TDRs (Recoveries)

Commercial, financial and agricultural $ 29,273 $ 16,462 $ 6,692 $ 268,288 $ 1,456 $ 24,110,067 $ 24,432,238 $ 37,788

Real estate - construction 7,603 2 571 8,041 72 2,012,393 2,028,682 (126)

Commercial real estate - mortgage 5,325 5,458 6,576 98,077 3,414 13,742,628 13,861,478 (285)

Residential real estate - mortgage 72,571 21,909 4,641 147,337 57,165 13,230,331 13,533,954 107

Equity lines of credit 15,766 6,581 1,567 38,113 - 2,530,653 2,592,680 857

Equity loans 2,856 1,028 195 8,651 23,770 208,468 244,968 137

Credit card 11,275 9,214 22,796 - - 959,080 1,002,365 16,760

Consumer - direct 33,658 20,703 18,358 6,555 12,438 2,246,430 2,338,142 58,190

Consumer - indirect 83,966 28,430 9,730 31,781 - 3,758,443 3,912,350 27,275

Total loans $ 262,293 $ 109,787 $ 71,126 $ 606,843 $ 98,315 $ 62,798,493 $ 63,946,857 $ 140,703

Loans held for sale $ - $ - $ - $ - $ - $ 112,058 $ 112,058 $ -

BBVA USA BANCSHARES, INC.

SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited)

(Dollars in Thousands)

At or Quarter Ended September 30, 2019

30-59 Days Past 60-89 Days Past 90 Days or More Past Due Nonaccrual Accruing Not Past Due or Impaired Total Net Charge Offs Due Due TDRs (Recoveries)

Commercial, financial and agricultural $ 30,779 $ 24,036 $ 11,179 $ 301,021 $ 1,552 $ 24,314,563 $ 24,683,130 $ 69,942

Real estate - construction 3,831 185 532 1,616 76 1,999,107 2,005,347 (59)

Commercial real estate - mortgage 13,939 41 2,375 110,632 3,492 12,943,694 13,074,173 2,250

Residential real estate - mortgage 74,796 22,329 4,778 153,078 60,537 13,187,809 13,503,327 1,280

Equity lines of credit 11,088 4,616 2,072 36,879 - 2,563,457 2,618,112 431

Equity loans 2,452 978 524 8,728 24,789 225,973 263,444 (59)

Credit card 10,372 8,092 20,037 - - 897,646 936,147 16,398

Consumer - direct 35,762 23,075 17,773 7,348 7,360 2,297,040 2,388,358 63,992

Consumer - indirect 81,075 26,294 8,599 33,940 - 3,698,625 3,848,533 21,923

Total loans $ 264,094 $ 109,646 $ 67,869 $ 653,242 $ 97,806 $ 62,127,914 $ 63,320,571 $ 176,098

Loans held for sale $ - $ - $ - $ - $ - $ 134,314 $ 134,314 $ -

BBVA USA BANCSHARES, INC.

BALANCE SHEET (Unaudited)

(Dollars in Thousands)

2020 2019

September 30 June 30 March 31 December 31 September 30

Assets:

Cash and due from banks $ 1,035,307 $ 1,019,127 $ 1,033,733 $ 1,149,734 $ 1,117,458

Federal funds sold, securities purchased under 14,041,538 11,738,063 4,479,535 5,788,964 5,356,141agreements to resell and interest bearing deposits

Cash and cash equivalents 15,076,845 12,757,190 5,513,268 6,938,698 6,473,599

Trading account assets 926,497 1,016,966 1,009,130 473,976 564,000

Debt securities available for sale 6,028,072 5,765,192 6,344,816 7,235,305 7,612,590

Debt securities held to maturity, net 9,428,931 8,693,437 7,876,266 6,797,046 6,334,634

Loans held for sale 253,454 245,851 117,752 112,058 134,314

Loans 66,180,612 68,241,500 67,539,414 63,946,857 63,320,571

Allowance for loan losses (1,804,423) (1,754,352) (1,351,072) (920,993) (942,191)

Net loans 64,376,189 66,487,148 66,188,342 63,025,864 62,378,380

Premises and equipment, net 1,063,923 1,070,358 1,068,741 1,087,698 1,085,635

Bank owned life insurance 758,391 754,908 754,409 750,224 746,819

Goodwill 2,328,296 2,328,296 2,328,296 4,513,296 4,983,296

Other assets 3,412,324 3,148,270 3,124,539 2,669,182 2,600,820

Total assets $ 103,652,922 $ 102,267,616 $ 94,325,559 $ 93,603,347 $ 92,914,087

Liabilities:

Deposits:

Noninterest bearing $ 26,803,670 $ 25,978,354 $ 20,418,504 $ 21,850,216 $ 21,019,303

Interest bearing 59,567,362 59,448,060 56,816,003 53,135,067 52,550,139

Total deposits 86,371,032 85,426,414 77,234,507 74,985,283 73,569,442

FHLB and other borrowings 3,560,973 3,571,933 3,790,137 3,690,044 3,709,949

Federal funds purchased and securities sold under 189,474 249,481 409,784 173,028 117,421agreements to repurchase

Other short-term borrowings - 1,619 - - 45

Accrued expenses and other liabilities 2,136,479 1,747,380 1,532,777 1,368,403 1,415,612

Total liabilities 92,257,958 90,996,827 82,967,205 80,216,758 78,812,469

Shareholder's Equity:

Preferred stock 229,475 229,475 229,475 229,475 229,475

Common stock - $0.01 par value 2,230 2,230 2,230 2,230 2,230

Surplus 14,032,321 14,035,607 14,039,572 14,043,727 14,359,966

Retained deficit (3,264,295) (3,430,135) (3,305,226) (917,227) (585,859)

Accumulated other comprehensive income (loss) 365,374 404,165 362,339 (1,072) 66,009

Total BBVA USA Bancshares, Inc. shareholder's equity 11,365,105 11,241,342 11,328,390 13,357,133 14,071,821

Noncontrolling interests 29,859 29,447 29,964 29,456 29,797

Total shareholder's equity 11,394,964 11,270,789 11,358,354 13,386,589 14,101,618

Total liabilities and shareholder's equity $ 103,652,922 $ 102,267,616 $ 94,325,559 $ 93,603,347 $ 92,914,087

BBVA USA BANCSHARES, INC.

INCOME STATEMENT (Unaudited)

(Dollars in Thousands)

Three Months Ended

2020 2019

September 30 June 30 March 31 December 31 September 30

Interest income:

Interest and fees on loans $ 644,643 $ 669,767 $ 715,476 $ 738,140 $ 771,245

Interest on debt securities available for sale 19,474 18,805 (1,492) 33,333 36,051

Interest on debt securities held to maturity 49,981 39,800 41,102 43,097 38,893

Interest on trading account assets 892 1,157 1,122 1,326 487

Interest and dividends on other earning assets 6,436 14,016 42,175 39,915 46,528

Total interest income 721,426 743,545 798,383 855,811 893,204

Interest expense:

Interest on deposits 61,147 97,279 164,742 189,345 203,979

Interest on FHLB and other borrowings 14,644 21,936 21,176 31,263 32,975

Interest on federal funds purchased and securities sold 3,736 12,274 22,658 11,850 15,137under agreements to repurchase

Interest on other short-term borrowings 49 39 352 199 72

Total interest expense 79,576 131,528 208,928 232,657 252,163

Net interest income 641,850 612,017 589,455 623,154 641,041

Provision for credit losses 150,977 539,459 356,991 119,505 140,629

Net interest income after provision for credit losses 490,873 72,558 232,464 503,649 500,412

Noninterest income:

Service charges on deposit accounts 54,710 44,233 61,531 64,585 65,143

Card and merchant processing fees 48,628 43,416 50,091 50,805 50,385

Investment services sales fees 26,218 24,971 34,407 28,130 29,287

Investment banking and advisory fees 40,013 45,061 26,731 15,720 28,324

Money transfer income 27,109 25,461 24,548 25,871 26,020

Asset management fees 12,024 11,560 11,904 11,532 11,405

Corporate and correspondent investment sales 3,478 18,855 10,717 14,263 11,799

Mortgage banking 13,741 23,868 17,451 9,048 8,204

Bank owned life insurance 4,972 5,094 4,625 4,584 3,508

Investment securities gains, net - 3,477 19,139 - 21,003

Other 53,767 26,358 73,098 48,046 66,241

Total noninterest income 284,660 272,354 334,242 272,584 321,319

Noninterest expense:

Salaries, benefits and commissions 296,708 251,697 310,136 297,823 295,092

Equipment 68,793 64,752 64,681 64,826 63,908

Professional services 78,018 78,100 70,220 82,343 72,903

Net occupancy 41,145 41,585 39,843 43,302 42,241

Money transfer expense 18,897 17,958 17,136 17,951 18,005

Marketing 9,283 8,778 11,899 12,888 15,471

Communications 5,542 5,808 5,371 5,179 5,469

Goodwill impairment - - 2,185,000 470,000 -

Other 77,242 110,772 104,774 92,594 85,798

Total noninterest expense 595,628 579,450 2,809,060 1,086,906 598,887

Net (loss) income before income tax expense 179,905 (234,538) (2,242,354) (310,673) 222,844

Income tax (benefit) expense 13,664 (110,101) (5,069) 20,032 39,899

Net (loss) income 166,241 (124,437) (2,237,285) (330,705) 182,945

Less: net income attributable to noncontrolling interests 401 472 501 663 514

Net (loss) income attributable to BBVA USA Bancshares, Inc.

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SOURCE BBVA USA